Did the 'Repeal' of Glass-Steagall Have Any Role in the Financial Crisis? Not Guilty; Not Even Close

Networks Financial Institute, Policy Brief 2009-PB-09

17 Pages Posted: 18 Nov 2009

See all articles by Peter J. Wallison

Peter J. Wallison

American Enterprise Institute (AEI)

Date Written: November 2009


Ever since severe turmoil enveloped the financial markets in the fall of 2008, commentators have blamed deregulation of the financial system, and specifically the supposed “repeal” of the Glass-Steagall Act by the Gramm-Leach-Bliley Act of 1999, for the crisis. This has led many to advocate a restoration of the separation of commercial and investment banking that was supposedly the essence of the Glass-Steagall Act. These statements reflect a remarkable degree of ignorance about something that could be easily understood with a small amount of research. In this paper, I will outline the provisions of the Glass-Steagall Act, and show that it did not and could not have had any significant effect in creating or exacerbating the financial crisis.

Keywords: Glass-Steagall Act, Gramm-Leach Bliley Act, Financial Crisis, Financial Regulatory Reform

JEL Classification: G2, G01, G18

Suggested Citation

Wallison, Peter J., Did the 'Repeal' of Glass-Steagall Have Any Role in the Financial Crisis? Not Guilty; Not Even Close (November 2009). Networks Financial Institute, Policy Brief 2009-PB-09, Available at SSRN: https://ssrn.com/abstract=1507803 or http://dx.doi.org/10.2139/ssrn.1507803

Peter J. Wallison (Contact Author)

American Enterprise Institute (AEI) ( email )

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HOME PAGE: http://www.aei.org/scholars/wallison.htm

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